Philadelphia Bar Association Multidisciplinary Practice Task Force

I. Introduction
The Philadelphia Bar Association's Task Force on Multidisciplinary Practice submits this Report. By "multidisciplinary practice," we refer to any business entity that would provide legal services either alone or in combination with other professional services, where ownership of the business would not be confined exclusively to lawyers. At present, lawyers in the United States are for the most part prohibited from participating in these kinds of arrangements by the Rules of Professional Conduct.

The idea of allowing lawyers and nonlawyers to go into business together, to the point of allowing attorneys to practice law in law firms under the financial control of nonlawyers, has been and remains unpopular with much of the organized bar. Despite the growing number of lawyers who practice in MDPs abroad, the overwhelming majority of jurisdictions in this country continue to prohibit them.

Indeed, whether the legal profession in the United States would willingly accept MDPs as a suitable vehicle for law practice is yet to be determined. Just this past August, at the ABA's 1999 annual meeting, the House of Delegates rejected a proposal by the ABA's Commission on Multidisciplinary Practice that would have allowed MDPs to provide legal services, so long as these businesses met restrictions designed to preserve lawyer independence and prevent conflicts of interest.(1) The ABA's Commission continues its work, but the House so far has set no deadline for reconsidering the issue.

Our Task Force views the issuance of the Multidisciplinary Commission's report and the House of Delegates vote not as the culmination of the MDP debate, but as the latest attempt to grapple with an issue whose resolution will go a long way towards determining the future of our profession. After considerable study and reflection, our general conclusion is that MDPs should be allowed to provide legal services to the public. Of course, they must do so ethically and in a manner that preserves lawyer independence, and we believe that lawyer controlled MDPs can be trusted to provide legal services in such a manner. However, a majority of the Task Force would not advocate the acceptance of non-lawyer owned MDPs until an effective regulatory framework for such entities is established. The reasons for our conclusions and a more detailed set of recommendations are set forth below.

II. The Task Force and Its Work
The Philadelphia Bar Association's Task Force on Multidisciplinary Practice was charged with exploring the range of issues surrounding multidisciplinary practices and, if appropriate, with formulating a position for the Association on whether the Rules of Professional Conduct should be amended to allow for them. The Task Force's makeup was intended to reflect the full diversity of the Association's membership. Also represented were members of other potentially affected professions, including representatives from professional services firms, and other law-related professionals. A full listing of Task Force members is attached as Appendix A.

The Task Force believed that an integral part of its mission was to educate Association members on the issues raised by multidisciplinary practices. As part of that mission, the Task Force sponsored a day long CLE program on multidisciplinary practices on September, 24, 1999. The program included speakers from law faculties, from current and former members of law firms, from corporate in house counsel, from business consultants to the legal profession, and from professional service firms. Through their questions and comments, Association members shared their personal perspectives on the MDP issue with panelists and attendees, which only added to the overall quality of the material presented. For our part, the Task Force acquired valuable information and insights from the program, and these insights have contributed significantly to the formulation of the views expressed in this Report.

A. Background
A great deal has been written about multidisciplinary practice and its potential effects on the practice of law in the future. Most of the recent media attention on the issue has focused on the activities of the "Big Five" professional service firms, which employ lawyers as consultants in the United States and run their own legal practices abroad. But the current MDP discussion is also a continuation of a long standing debate among lawyers themselves on whether the profession's prohibitions on "fee splitting" among lawyers and nonlawyers continue to make sense in a changing business and regulatory world. As adopted in Pennsylvania and other states, Rule 5.4 of the Rules of Professional Conduct prohibits lawyers and law firms from sharing legal fees with nonlawyers, with certain limited exceptions.(2) Completely overturning this prohibition would result in a fundamental change in how certain legal services are delivered in this country.

Prohibitions against "fee splitting" have been part of the law governing lawyers for almost as long as law has been considered a "profession." Although it is true that the organized bar did not adopt a specific ethical canon against the practice until 1928,(3) and that the rule against fee splitting was not mandatory until 1969,(4) courts here and in England have voided lawyer/non lawyer fee-splitting agreements as against public policy since the 1800's. In the United States, the critical period in the development of the rule against fee splitting occurred immediately after World War I, following a number of earlier federal and state court decisions revoking fee splitting agreements between lawyers and nonlawyers.(5) By the 1940's, various ABA Formal Opinions on Legal Ethics prohibited fee splitting with a number of lay occupations, including accountants.(6) As a result, in the 1950's when Henry Drinker's treatise on legal ethics was published, the ethical prohibitions on fee splitting had all of the characteristics of what we now think of as hornbook law.(7)

More recently, some commentators have criticized Rule 5.4 as obsolete and protectionist.(8) Indeed, when the Model Rules of Professional Conduct were first proposed in 1982, the ABA Commission on Evaluation of Professional Standards (the Kutak Commission) recommended that the Code of Professional Ethics' prohibition on fee splitting be repealed. As proposed, the Rule would have allowed lawyer/nonlawyer partnerships to provide legal services so long as attorney-client confidences were protected and the organization refrained from interfering with the lawyer's independence of judgment.(9) The Commission took the position that fee splitting prohibitions were outmoded in light of modern business practices, focused on the wrong policy goals, and premised on assumptions that bore at best a "tenuous" relationship with empirical fact.(10)

The Kutak Commission's proposal ultimately was rejected by the ABA's House of Delegates in 1983 before the Model Rules were adopted. It was the only rule proposed to the House that was rejected in its entirety.(11) Following the House vote, the controversy appears to have subsided somewhat, although debate among interested commentators continues.(12)

The debate over MDPs has intensified in recent years because of a marked increase in the number of such businesses in Europe and elsewhere. The growth in MDPs abroad is in large part the result of aggressive acquisitions of law practices by the "Big Five" professional services firms.(13) As the ABA's Commission on Multidisciplinary Practice has reported, "The international accounting firms have publicly stated their intention to become major players in the marketplace for legal services around the globe."(14) This strategy has resulted in a steady growth in the number of lawyers employed by these firms in the U.S. and abroad. The ABA reports, for example, that PriceWaterhouseCoopers now employs one thousand six hundred lawyers in forty-two different countries.(15) A recent American Lawyer article reports that Arthur Andersen's law firm network, Andersen Legal, employs some twenty-seven hundred lawyers worldwide.(16)

If the rules prohibiting fee sharing were to change, the lawyers employed by the professional services firms in all likelihood would become direct competitors to traditional law firms in the United States.(17) At present, in all areas except tax (where there is direct competition), the competition for domestic "legal" business between service firms and law firms is indirect, but substantial. In the United States, all of the Big Five employ lawyers along with other professionals, like M.B.A.'s, actuaries and, of course, C.P.A.'s, who consult with clients on tax and other business and regulatory issues.(18) Some of these firms have entered into strategic alliances with law firms where the relevant jurisdiction's ethical rules have permitted such alliances.(19)

Indeed, even a casual review of the presentations made to the ABA Commission in the course of its deliberations reveals that representatives of the professional services industry have been prolific contributors to the MDP debate. And they may not be the only competitors: at least one informed observer has suggested that insurance companies, banks, estate planners, and brokerage houses also might compete for legal business if the fee splitting restrictions were lifted.(20)

B. What Is to be Gained from Allowing Multidisciplinary Practices to Provide Legal Services?
MDPs face principled and passionate opposition from respected members of both the bar and the legal academy. If MDPs are to become a force in how law is practiced in the United States, then their potential value to the public and to the profession as a whole must be seen as outweighing their weaknesses as vehicles for the delivery of legal services. We believe that at least two arguments can be made for allowing MDPs to provide legal services in the United States.

First, the available evidence suggests that at least some clients are interested in advisors that can provide comprehensive solutions, i.e. solutions combining legal and non-legal elements and approaches, to their problems. The clearest statement of support for this position among clients comes from the American Corporate Counsel Association, which in February of 1999 adopted the following position statement on the MDP issue:

The American Corporate Counsel Association supports a broader range of choice for clients to select from service providers capable of formulating comprehensive solutions which address not only the legal aspect of their problems but various other facets as well. Subject to resolving important issues of ethics and professionalism in the best interests of the client and the public, such a broader range of choice could include multidisciplinary practices wherein lawyers are affiliated with nonlawyers.

Other evidence of client interest can be found in statements made or submitted to the Commission during the course of the ABA's recent deliberations of the MDP issue. Business people and representatives from corporate general counsel's offices either expressed interest themselves in obtaining multidisciplinary services, or they suggested that there was market interest in having interdisciplinary advice available through a single office.(21)

Some commentators have cautioned against overestimating the evidence of client or general consumer interest in MDPs. It is true that there are no reliable studies or surveys of the potential market for MDPs in the United States, and much of the evidence that is available is either anecdotal or speculative. Perhaps more importantly, neither the ACCA's statement nor any other of the materials that we have reviewed suggest an unqualified interest in MDPs as legal service providers. Clients would appear to want access to multidisciplinary solutions, but not necessarily at the expense of waiving the confidentiality rights and protections from conflicts that remain valuable to them today. Even with these qualifications, however, it is fair to conclude that some amount of interest in multidisciplinary solutions does exist among clients, and that their interest in obtaining these services through MDPs might grow if MDPs were allowed to compete for their business.

The second reason for more seriously considering MDPs is the interest expressed by some lawyers themselves in developing and marketing interdisciplinary approaches to solving clients' problems. The suggestion that lawyers and nonlawyers should work more closely together in advising clients in some areas is not a new one.(22) For some time, lawyers have supported (or predicted) arrangements that would allow the merging of legal and non-legal expertise under one roof (or, at the very least, under separate but interrelated roofs).(23) Pennsylvania already has moved one step in this direction by expressly allowing lawyers to provide ancillary services, i.e. nonlegal services that are ancillary to the practice of law,(24) so long as the lawyers follow procedures designed to protect clients from confusion.(25)

Advocates among lawyers for the revision of Rule 5.4's provisions have focused on what they perceive as a need in certain practice areas to make top-flight, nonlawyer professionals available through their practices to clients. They argue that a relaxation of the fee splitting rules is needed to attract and retain high quality professionals who will not stay with a law firm if they are denied the opportunity to participate in firm governance and profit sharing. They also contend that the law firms' focus on a single approach to problem solving makes them less competitive in comparison to firms that can provide more comprehensive solutions.(26)

In submissions to the ABA Commission, practitioners in the family/elder law area expressed their interest in organizing multidisciplinary service groups for their clients. Observing that families in crisis often need multi-faceted relief, they argue that these clients might be able to obtain that assistance less expensively through an MDP.(27) One of the lawyers who spoke in favor of allowing MDPs in the family law area was Phillip Stinson, who runs a four-person law firm with offices in suburban Philadelphia and Wilmington, Delaware. According to his testimony, Stinson's office represents parents in disputes with public school officials involving the level of support to be provided for exceptional children under the Individuals with Disabilities Education Act (IDEA) in a number of suburban school districts. He and his colleagues hope to expand their practice to other locations, including Pittsburgh, San Diego and, possibly, Baltimore. As part of his practice, Stinson regularly works with other professionals, including clinical psychologists with certifications in school psychology. Stinson advocates amending Rule 5.4 to allow MDPs because he believes that his clients would be best represented by teams of lawyers and other professionals working together, rather than by lawyers alone employing arms-length experts.(28)

Other small-firm practitioners appear to share Mr. Stinson's desire to expand his practice to include other professionals. Larry Ramirez, Chair of the ABA's General Practice, Solo and Small Firm Section, testified before the ABA Commission that a task force appointed by his section to study the MDP issue had recommended: 1) that legal regulatory authorities should examine and accept MDPs "in some form"; 2) that rules against fee sharing with nonlawyers be "relaxed"; 3) that a regulatory structure for MDPs be instituted to protect clients; and 4) that the ABA Commission, in formulating its recommendations, should consider how its recommendations would impact solo and small firm practitioners.(29) The Chair of the ABA's Standing Committee on the Delivery of Legal Services also expressed his Committee's support for a relaxation of the fee splitting prohibition, arguing that the current rule "limits the creativity of innovative legal service providers and prevents the institutionalization of methodologies we have not yet considered."(30)

The belief that interdisciplinary approaches should be applied more frequently to what were once considered only legal problems is not confined to practitioners and in house corporate lawyers. Legal scholars also have argued that interdisciplinary problem solving skills should be taught in law schools as a response to what they perceive as client demand for more "holistic" approaches to resolving their problems. In a recent law review article, Professor Janet Weinstein argues that effective lawyering today requires training in interdisciplinary problem solving skills:

To accomplish the best results for clients, lawyers need to have access to resources and solutions beyond those they traditionally use. One important resource is the ability to collaborate with professionals from other disciplines so that their approaches to a particular problem can assist in creating a solution for the client. Lawyers will need to learn to be professionals at organizing, leading, coordinating, inspiring, participating in, and facilitating teams of helpers trained to approach clients' problems from a variety of disciplinary perspectives. The solutions might not be traditional legal measures if non-traditional measures are in the client's best interest; the lawyer's role is to insure that the team of professionals serves the client's interest in the least damaging and most helpful way possible.(31)

As was the case with attempts to measure client demand for MDPs, it also is important not to overstate this "trend" towards interdisciplinary practice. Law professors who have argued for more interdisciplinary approaches to legal education are not necessarily taking sides on what is essentially a debate on how to structure for-profit delivery of legal services. In addition, it would be inaccurate to suggest that all or even a majority of law professors -- even those who support interdisciplinary approaches -- support MDPs. Indeed, various legal scholars have staked positions clearly against MDPs, or at least against certain kinds of MDPs, in their writings.(32)

Taken together, however, these statements from practicing lawyers, from clients and their in-house counsel, and from legal scholars strongly suggest that an interest in pursuing interdisciplinary solutions to client issues does exist among both would-be providers of multidisciplinary services and would-be consumers of those services. It may be that, once allowed to compete actively in the legal services market, MDPs will prove a more popular means of delivering legal services in theory than in reality. But the bar must ask whether it can continue in good conscience to deny lawyers who want to practice in MDPs the opportunity to experiment with innovative delivery structures without having to disguise themselves as "consultants." In our view, the level of interest in interdisciplinary approaches on both sides of the attorney-client relationship calls for serious consideration of whether MDPs can serve as reliable, competent and ethical means of servicing client needs. The profession ignores this convergence of interests -- as well as the potential for innovation that can be stifled by advancing a blindly protectionist viewpoint -- at its peril.

C. Issues To Be Addressed
The ABA House of Delegates vote on the ABA Commission's proposal should have made it clear that the MDP concept faces an uphill battle with many of the members of our profession. The fact that last August's vote was the second rejection of this proposal by the House in less than twenty years should have dispelled any doubt about the conviction with which these views are held. To be sure, some of this opposition is premised on nothing more than economic self-interest, pure and simple. But to conclude that protectionism is the only motivating force behind this opposition is to succumb to the worst kind of cynicism about the legal profession and the people who have chosen law as their career.

In truth, there are valid reasons to be concerned about whether MDPs are a safe means of providing legal services to the public, and for several reasons we do not believe that a majority of the bar will support MDPs until these concerns are addressed. First, in our experience, most lawyers will hesitate before accepting a business form that they view as providing insufficient protection for their clients' interests. Our best lawyers feel bound by a duty of loyalty to their clients that transcends the minimum obligation required by ethical rules. Second, it will be difficult to convince lawyers to willingly enter a situation where their continued independence is not guaranteed. Most of these professionals have spent their formative years in a culture where the concept of lawyer independence is considered not merely an old-fashioned virtue, but a necessary component of any successful client representation.

Finally, an equally important consideration is the fact that allowing MDPs to provide legal services will require the rejection or wholesale reconsideration of an ethical rule, i.e., the prohibition against fee splitting, that has become part of the fabric of the legal profession. Regardless of whether it is fair to characterize the fee splitting prohibition as protectionist, the rule has played a central role in preserving the professional independence of lawyers. It is unrealistic, and perhaps even counterproductive, to expect lawyers to buy into a change as fundamental as the one proposed without a more detailed discussion of alternatives. As our colleague Larry Fox has observed, changes in the medical profession have provided a cautionary tale about the challenges a profession can face when it accepts long-term dilutions in its autonomy in exchange for short-term financial gain.(33)

These concerns must be addressed with proposals for change that inspire greater confidence in the bar if MDPs are to be accepted, much less embraced, as a valid means of delivering legal services. We think that progress can be made in reconsideration by the ABA Commission of some of the proposals it made in its initial recommendations. We discuss what we view as the areas most in need of reconsideration here. We have described our concerns about these areas in some detail, moreover, to ensure that our position is clear.

1. Loss of Independence
Lawyers are steeped in a tradition of professional independence. They are required on pain of discipline to exercise independent professional judgment and to provide candid advice.(34) The core of this independence is the ability to advise a client against taking certain kinds of actions. In other words, to be effective, lawyers must be free to say "no" when "no" is the appropriate answer. As the comment to Rule 2.1 explains, "Legal advice often involves unpleasant facts and alternatives that a client may be disinclined to confront…. A lawyer should not be deterred from giving candid advice by the prospect that the advice will be unpalatable to the client." Protecting this professional value is the primary justification for Rule 5.4's continued existence. As the Seventh Circuit has explained, "The regulation attempts to minimize the number of situations in which lawyers will be motivated by economic incentives rather than by their clients' best interests."(35)

No one can seriously question the financial pressures that increased competition for legal work have already placed on lawyers in this regard. But, at least until now, and largely because of the institutional protections fostered by the fee splitting ban, most lawyers either presently work in or at some point in their careers have worked in professional environments -- that is, either in traditional law firms or in other kinds of offices controlled solely by lawyers -- where the need to say "no" is recognized, reinforced by culture and training, and supported by colleagues and mentors. We are concerned that lawyers who spend their entire careers in certain kinds of multidisciplinary environments will receive neither the training nor reinforcement needed to render that kind of independent advice. Clients will suffer as a result, and the public's perception of the profession will be diminished even further.

We believe that the threat to lawyer independence would be most substantial in MDPs where nonlawyers have financial control of the firm. The ABA Commission attempted to address these issues by continuing the prohibition on passive investments by nonlawyers in law firms, and by recommending that MDPs in general and nonlawyer-managed MDPs in particular be subject to a certification and audit regime. This enforcement scheme would require the CEO of each such organization to certify specifically that the MDP will take steps to preserve lawyer independence and to follow measures designed to ensure that its lawyers will comply with the Rules of Professional Conduct. The licensing authority would then have the right to audit MDPs to determine whether they are in compliance with these undertakings.

The problem with the ABA Commission's proposal is that it provides no guidance about the kinds of specific steps an MDP controlled by non-lawyers can and should take to meet the requirement that a lawyers' duty to think and act independently be protected. We believe that absent useful guidance on these structural issues, the ABA's recommendations more closely resemble aspirational guidelines than effective tools for management and self-regulation.

2. Conflict Avoidance and Resolution
How conflicts of interest would be resolved in an MDP regime is a matter of particular concern to clients. The ABA Commission has acknowledged that serious conflicts can arise from differences between attorney conflict of interest rules and the conflict of interest rules governing other professions.(36) The conflicts that have drawn the most attention have been those between the rules governing lawyers and accountants, especially those involving the imputation of an individual lawyer's conflicts to the law firm in its entirety.(37) Commentators on both sides of the MDP debate have suggested that other conflicts raised by MDPs also should give cause for concern.

The ABA Commission has recommended measures intended to prevent conflicts, including the requirement that a MDPs lawyers consider all of the MDPs clients when applying the Rules of Professional Conduct's imputed disqualification provisions. This rule would apply regardless of whether the particular clients at issue have used the services of the MDPs lawyers.(38) In addition, the ABA Commission has concluded, based on its communications with the SEC, that MDPs should not be allowed to provide both audit and legal services to the same client.(39)

This is an area in which MDPs will need more specific guidance than the Commission's proposed regulatory framework presently provides. For example, it may be that some conflicts effectively may be avoided only by prohibiting lawyers from practicing with particular groups of professionals, even if legal practice within other kinds of MDP structures is allowed.

3. Preserving Confidences and the Attorney-Client Privilege
The risks that a client's confidences will be publicly disclosed and that attorney-client or work-product privileges will be waived inadvertently also are increased in the MDP setting. It has been acknowledged that certain kinds of communications between lawyer and nonlawyer partners in MDPs can result in a loss of attorney-client privilege. The risk to the client is more acute if the lawyer's disclosure of otherwise privileged information to a nonlawyer partner triggers a reporting requirement on the part of the nonlawyer (like a health professional's statutory duty to report cases of possible child abuse to law enforcement officers).(40)

The ABA Commission's recommendations attempt to deal with these issues by keeping the mechanics of protecting the privilege in the hands of the MDPs lawyers, and through providing suggestions in comments (albeit somewhat vague ones) about how confidentiality can be protected. An MDPs lawyers also would be required to "make reasonable efforts to make sure the client sufficiently understands that a lawyer and nonlawyer involved in providing the client services may have different obligations with regard to disclosure of client information, and that the courts may treat the clients' disclosures to the lawyer differently than disclosures to nonlawyers."

Some commentators, including the committee charged by Association of the Bar of the City of New York with addressing MDP issues, have questioned the workability of the ABA's position. The New York City Bar has suggested that the problem might be better addressed through, among other measures, mandatory disclosures that would alert clients to the unique threat to attorney-client confidentiality posed by the MDP setting. We agree, and believe that more detailed guidance on how confidences should be protected also will be necessary if MDPs are to succeed.

4. Protecting Clients From Unskilled Practitioners
We agree with the ABA Commission that lawyers should be solely responsible for the advice clients receive on legal issues. We are concerned that in multidisciplinary environments, the risk of nonlawyers providing legal advice would be substantially increased. Such confusion of roles can result in both a lack of quality representation for clients and, on a more practical level, an increased risk of malpractice liability for lawyers practicing in MDPs.(41) Ensuring that legal advice will not be "blurred" or otherwise "dumbed down" for clients should be a central concern of any MDP proposal.

IV. Conclusions and Recommendations
Our review of the considerations outlined above leads us to conclude that the MDP issue cannot and should not be ignored, even though the latest attempt to amend the fee splitting provisions has been defeated. We do not believe that the issue will "go away" for a time, as it seemed to do after the Kutak Commission's recommendations were rejected in 1983. Since then MDPs have become economically viable players in the legal landscape abroad, and they would soon become part of the system here in the United States if lawyers were allowed to practice with them. Recent developments make it clear that the issue is "in play" for interested parties both within and without the legal profession.

In light of these developments, the organized bar has, broadly speaking, three possible responses to the MDP issue. First, it can continue to block the development of any and all species of MDPs as threats to the professional independence and the economic well-being of lawyers, and as diluting the quality of service the profession provides to its clients. Second, it can vote to support the establishment of any and all MDPs, including fully integrated models and law firms controlled by passive financial investors, leaving primarily the market to decide which models should be allowed to continue to provide legal services and which should be abandoned. Third, it can attempt to find an appropriate balance between two substantial but competing interests: the internal and external market forces pushing for interdisciplinary approaches to problem solving and a reassessment of the prohibitions on fee splitting, and their impact on the professional values that so far have succeeded in preserving the independence of the legal profession.

The Task Force recommends the third of these approaches, with the goal of striking a balance that encourages appropriate innovation in the delivery of legal services while continuing to protect the interests of clients and the independence of the legal profession. As part of its deliberations, the Task Force considered, but ultimately rejected, the idea that more study on the demand for MDPs by clients was needed before recommending that some MDPs be allowed to operate. In our view, the best way to determine what the market wants is to allow at least lawyer controlled MDPs to operate, and then to determine whether other MDP forms can provide legal services in a manner consistent with the public interest. Our specific recommendations are outlined below.

Recommendation 1: Some forms of MDPs should be allowed and the fee-splitting prohibition relaxed.
We believe that the prohibitions against fee-splitting with non-lawyers should be substantially relaxed to allow at least for MDPs owned and controlled by lawyers. Although the level of interest in MDPs per se is not easily quantified, some clients clearly are interested in encouraging multidisciplinary approaches to problem-solving, believing that MDPs should be allowed to provide such services if ethics and professionalism concerns can be satisfactorily addressed. If the profession's decision on the MDP issue is to be guided by the interests of our clients and the public at large, it makes no sense to ignore what may be a growing interest in a kind of service that can take advantage of and potentially find financial efficiencies in interdisciplinary approaches to problem solving.

Change and the prospect of increased competition from better capitalized entities makes some lawyers uncomfortable, and understandably so. Our Task Force agrees, moreover, with the commentators who have expressed concerns about the ethical problems that can arise from MDPs that are neither owned nor managed day-to-day by practicing lawyers. Nevertheless, we believe the profession will find, after a thorough and objective examination, that lawyer controlled MDPs (with appropriate guidance and oversight from state licensing authorities) can represent clients' interests effectively and ethically, and it is our view that they should be allowed to compete freely in the legal marketplace.(42)

Recommendation 2: Lawyer controlled MDPs should be allowed to practice without delay; other forms should be allowed only after additional study and the enactment of appropriate regulations.
The Task Force is in favor of amending Rule 5.4 to allow lawyers to split fees with nonlawyer professionals in MDPs owned and controlled by licensed practicing lawyers. By "control," the Task Force means actual control, management and direction. In our view, these kinds of firms -- which can provide legal services in combination with other compatible services, but under the control and supervision of professionals experienced in applying the Rules of Professional Conduct in complex situations -- should be able to manage the demands of rewarding non-lawyer professionals with an appropriate share of their businesses, while ensuring that their firms comply with the professional standards and core values of the legal profession. Such a moderate change in the rules governing our ethical conduct would be fully consistent, moreover, with Pennsylvania's decision to allow law firm ownership of ancillary businesses.

The majority of Task Force members are not yet convinced, however, that MDPs controlled by non-lawyers should be allowed to provide legal services without a more defined regulatory framework. As stated earlier, we do not think that the ABA Commission's report provides sufficient guidance on issues like avoiding conflicts, and protecting confidences to inspire confidence that the regulatory scheme it proposes would provide sufficient protection to clients. We also remain unpersuaded that the Commission's scheme as formulated at this time will guarantee the professional independence that lawyers require to be effective. Before such businesses are allowed to provide legal services, we suggest that the following questions would have to be more definitively answered by the Commission:

1. What specific steps should be taken to preserve the independence of lawyers who practice within MDPs controlled by non-lawyers? Should there be rules that go beyond those already requiring individual lawyers to exercise independent judgment on their clients' behalf?

3. What regulations should lawyers practicing within a non-lawyer controlled MDP and/or such an MPD itself be required to follow with regard to identifying, preventing and where possible, resolving conflicts of interest? For example, should the bar's imputed disqualification rules be applied to any MDP that provides legal services?

4. Should MDPs where lawyers constitute a minority of the professionals employed by the business be required to follow special regulations regarding internal firm communications, and storage and access to privileged materials, such as a rule requiring the maintenance of legal client files separate from other files? How should clients be apprised of the specific risks to confidentiality from obtaining legal advice or other legal services through such an MPD?

Formulating the right approach to these issues will take additional time and study, and the organized bar should not allow itself to be pushed into immediate acceptance of any and all MDP forms without them. By its most recent request for information and comment, the ABA Commission has acknowledged that its proposals will not be accepted without more work. For example, in its second background report, the Commission explained that it purposely made its certification and audit proposal somewhat vague, because it feared that encouraging debate on details "would interfere with the discussions of the more important general principles."(43)

It will take time to build a consensus about these issues within the profession. The Commission's subsequent decision to seek additional input from the bar is, in our view, a welcome step towards finding a more effective solution to the ethical and organizational challenges raised by multidisciplinary practice. We also applaud the ABA Commission's decision to share its work product and the materials submitted to it with the organized bar. We encourage the ABA Commission to continue with this policy of openness, so that all concerned lawyers may keep abreast of the Commission's important deliberations.(44)

Recommendation 3: An MDP should not be allowed to offer legal and audit services to the same client.
The Task Force does agree that one provision should bind all MDPs, whether lawyer-owned or not. The U.S. Securities and Exchange Commission has not yet taken a position on MDPs per se. However, the Commission has reminded the ABA that under SEC regulations the disclosure function of auditors and the confidentiality provisions that bind attorneys are incompatible.(45) Both the ABA Commission and the New York City Bar Association have endorsed this view.(46) We agree and join them in recommending that MDPs not be allowed to provide audit and legal services to the same client.

Recommendation 4: Only lawyers in an MDP should be allowed to practice law.
Even if there is client interest in interdisciplinary solutions to their problems, we have found nothing to suggest that either clients or the public at large are interested in receiving a wide range of "legal" advice or services from nonlawyers. We therefore agree with the ABA Commission's recommendation that in any MDP, all legal matters should be handled by or under the supervision of a lawyer, and that all lawyers employed by an MDP who provide legal services must remain subject to the Rules of Professional Conduct.

We encourage and look forward to receiving comments on these proposals from all interested members of the Association. Perhaps the most important lesson for the Task Force has been that the MDP issue's resolution potentially effects all lawyers, regardless of specialty or type of practice. All members of the legal profession must accept responsibility for following the MDP debate and, by doing so, take an active role in charting the profession's future. We lawyers have no one to blame but ourselves if, through indecision or neglect, other interests are allowed to decide these important matters for us.